Enforcing Compliance in SaaS Environments with Contract Management Software

As the use of the SaaS delivery model continues to proliferate, enterprises moving to cloud solutions are discovering how vital it is to pay close attention to the contract terms of their SaaS vendors.

Before signing a SaaS vendor contract, enterprises should internally clarify the needs and objectives that they intend for that SaaS to help them meet. Then they can search the market for a vendor who offers specific contract terms that allow for those needs and objectives to be met. Or failing to find such a vendor, they can try to negotiate the terms they want with a vendor who otherwise appeals to them.

But even after an enterprise has secured the best contract terms it can, the challenge of SaaS implementation is long from over. To achieve the full potential of SaaS, enterprises need to have a contract management system for their vendor contracts.

“Once an organization has done all the hard work of negotiating suitable contract terms and conditions, it can be easy to sit back and think that their job is done. Unfortunately, that’s when the real work begins,” Thomas Trappler, UCLA’s director of software licensing and SaaS contracting instructor, recently told CIO.com.

The Cost of Not Managing Contracts

Contracts with SaaS vendors must be constantly monitored for performance and security compliance. All too often, enterprises fail to realize revenue that they are entitled to for non-compliance. Even more importantly, failure to live up to contract terms related to performance can lead to poor customer service and inefficient processes, while security lapses can cause unacceptable vulnerability.

When an enterprise contracts with SaaS vendors, it absolutely should expect the software to perform to the contract specifications or better, and to be as secure as promised. But it’s usually up to the enterprise to draw attention to any non-compliance and demand corrective action and allowed compensation.

An enterprise contract management software system will flag non-compliance immediately, so that the enterprise can address the issue with the vendor. Contract terms that have been specially negotiated require particular vigilance because the vendor is not performing the standard contract it’s used to.

Contract Management Software for Maximum Contract Benefit

However, the old paper-based method of enterprise contract management is prone to numerous inefficiencies, including human error, lost or hard-to-find documents, disparate “silos” of contract data, the difficulty of compiling and analyzing data, the cost of paper storage, and the cost of labor for redundant paperwork.

The automated processes of contract management software can do a far better job of keeping enterprises constantly on top of the level of service they’re receiving from SaaS vendors — and at far less long-term cost.

SaaS as the Contract Management Delivery Solution

Ironically, many enterprises are finding that the solution to contract management of SaaS vendor contracts is in fact SaaS. Cloud-based providers of contract management software offer the same benefits as SaaS vendors for other software – lower upfront capital and licensing costs,  anywhere/anytime access, constant software updating, seamless integration with other enterprise-level software, and less burden on internal IT staff.

SaaS contract management enables many enterprises that otherwise couldn’t make the investment in contract management software to do so.

Takeaway

However an enterprise decides to approach it, the management of SaaS contracts is imperative for enterprises seeking to take advantage of the many benefits of SaaS. Without a contract management system in place to ensure that vendors are doing what they’re obligated to do, an enterprise is highly likely to leave money on the table – and it could face disastrous consequences if the non-compliance is severe enough.